Rule 44 of CGST Rules – Manner of reversal of credit under special circumstances

(updated as on 15.11.2017)

(1) The amount of inputtax credit relating to inputs held in stock, inputs contained in semi-finished and finishedgoods held in stock, and capital goods held in stock shall, for the purposes of sub-section (4)
of section 18 or sub-section (5) of section 29, be determined in the following manner,namely,-

(a) for inputs held in stock and inputs contained in semi-finished and finished goodsheld in stock, the input tax credit shall be calculated proportionately on the basis ofthe corresponding invoices on which credit had been availed by the registeredtaxable person on such inputs;

(b) for capital goods held in stock, the input tax credit involved in the remaining usefullife in months shall be computed on pro-rata basis, taking the useful life as fiveyears.

Illustration:

Capital goods have been in use for 4 years, 6 month and 15 days.
The useful remaining life in months= 5 months ignoring a part of the month
Input tax credit taken on such capital goods= C
Input tax credit attributable to remaining useful life= C multiplied by 5/60

(2) The amount, as specified in sub-rule (1) shall be determined separately for input taxcredit of central tax, State tax, Union territory tax and integrated tax.
(3) Where the tax invoices related to the inputs held in stock are not available, the registeredperson shall estimate the amount under sub-rule (1) based on the prevailing market price ofthe goods on the effective date of the occurrence of any of the events specified in subsection(4) of section 18 or, as the case may be, sub-section (5) of section 29.
(4) The amount determined under sub-rule (1) shall form part of the output tax liability ofthe registered person and the details of the amount shall be furnished in FORM GST ITC-03, where such amount relates to any event specified in sub-section (4) of section 18 and inFORM GSTR-10, where such amount relates to the cancellation of registration.
(5) The details furnished in accordance with sub-rule (3) shall be duly certified by apracticing chartered accountant or cost accountant.
(6) The amount of input tax credit for the purposes of sub-section (6) of section 18 relatingto capital goods shall be determined in the same manner as specified in clause (b) of sub rule(1) and the amount shall be determined separately for input tax credit of central tax,State tax, Union territory tax and integrated tax:
Provided that where the amount so determined is more than the tax determined onthe transaction value of the capital goods, the amount determined shall form part of theoutput tax liability and the same shall be furnished in FORM GSTR-1.

CHAPTER V

INPUT TAX CREDIT

Rule 36 :Documentary requirements and conditions for claiming input tax credit
Rule 37 : Reversal of input tax credit in the case of non-payment of consideration
Rule 38 :Claim of credit by a banking company or a financial institution
Rule 39 :Procedure for distribution of input tax credit by Input Service Distributor
Rule 40 :Manner of claiming credit in special circumstances
Rule 41 :Transfer of credit on sale, merger, amalgamation, lease or transfer of abusiness
Rule 42 :Manner of determination of input tax credit in respect of inputs or input servicesand reversal thereof
Rule 43 :Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases
Rule 44 :Manner of reversal of credit under special circumstances
Rule 44A : Manner of reversal of credit of Additional duty of Customs in respect of Golddore bar
Rule 45 :Conditions and restrictions in respect of inputs and capital goods sent to the jobworker